The Group's total revenue during the year rose substantially to HK$3.9 billion, representing an increase of 37.4% as compared with the previous year. Gross profit strengthened to HK$747.4 million, whereas net profit attributable to equity holders of the Company rose to HK$305.5 million for a 22.1% growth. Basic earnings per share increased from HK43.4 cents to HK47.1 cents in the reporting year. The Group declared a final dividend of HK6.8 cents per share, which together with the interim dividend of HK7.2 cents, represents a 12% increase in full-year payout of HK14 cents.
Mr Chen Tien Tui, Chief Executive Officer of Victory City International, said: "The past year was full of changes and challenges, and the business environment experienced an increase in competition and higher expectations from customers. The management has been effectively and proactively planning for the future and ensuring adequate financing for our corporate development, while not losing focus of the need for cost reductions in all areas."
Production and sale of knitted fabric and dyed yarn remained the Group's principal business, with segment revenue reaching HK$2.6 billion, representing an increase of 43% as compared with the previous period. The growth was mainly attributable to enhanced utilization rates as well as the gradual expansion of the Group's monthly production capability of knitted fabric from 12 million pounds to 15 million pounds since September 2006.
During the year, improvements in production efficiency and product quality were achieved through investment in up-to-date machinery. The Group increased market share as a result of the accelerating consolidation among small players in the fabric industry caused by stringent environmental protection measures and rising operating costs.
The garment segment continued to demonstrate satisfactory performance during the period under review, achieving a 27% growth in revenue to HK$1.3 billion. With a diversified global out-sourcing base and self-owned garment manufacturing facilities in Jordan, the PRC and Indonesia, the Group is well-positioned to provide a comprehensive service and diversified product range to its customers.
The existing trade agreements between the PRC and Europe and the United States will expire by the end of 2007 and 2008 respectively. Even though new policies may again restrict the export of PRC textile products, the Group is well-prepared to capture business opportunities thanks to its enhanced and diversified garment manufacturing facilities.
Since the fourth quarter of the financial year, the monthly production capacity of both the Indonesian and PRC garment factories has been increased in order to meet the growing demand for the Group's garment products. With further improvements in production efficiency and product quality, the management is confident that the garment segment will maintain strong growth momentum in the coming years.
"Upon completion and installation of new advanced knitting machines," said Mr Chen, "our monthly knitting capacity will be enhanced by 50%. And as a result of the faster industry consolidation, we expect to have greater pricing power, which will improve our operating margin in the years ahead."
As at March 31, 2007, the Group had total assets of HK$4,655,392,000 (March 31, 2006: HK$3,638,188,000), and maintained current and gearing ratios of 1.7 (March 31, 2006: 1.5) and 80% (March 31, 2006: 57%) respectively.
Financial Highlights| Year ended March 31, | ||
| 2007 | 2006 | |
| HK$ '000 | HK$ '000 | |
| Turnover | 3,892,044 | 2,833,111 |
| Net profit attributable to shareholders | 305,501 | 250,269 |
| Earnings per Share | ||
| - Basic | HK47.1 cents | HK43.4 cents |
| - Diluted | HK46.8 cents | HK43.3 cents |
| Final dividend per share | HK6.8 cents | HK6.0 cents |
| Full-year dividend per share | HK14.0 cents | HK12.5 cents |
About Victory City
Victory City International Holdings Limited (HKEx: 539) is one of Hong Kong's major manufacturers of knitted fabric with an approximately 10-million-sq-ft production facilities in Xinhui City, Guangdong Province. The Group's principal operations include production and sale of knitted fabric and dyed yarn, and manufacturing and trading of garment products. The Company was named by Forbes as one of the "Best 200 Under a Billion" companies of 2006.